How the antitrust legislation treats abuse of dominant position now much clearer

07.07.2017

Goltsblat BLP advises that Clarifications of the Praesidium of the Federal Antimonopoly Service (the FAS) “On application of the provisions of article 10 of the Law on Protection of Competition” (the “Clarifications”) were published on 23 June 2017. Certain aspects are explained of the concept of abuse of dominant position, its impact on related markets and issue of cautions to put a stop to abuse of dominant position (the “Cautions”). The document was drawn up by the FAS and the Russian Corporate Counsel Association (RCCA), with direct participation by Nikolay Voznesenskiy, Partner and Head of the Goltsblat BLP Antitrust Practice, as well as other key experts on the market, as part of a joint working group.

Abuse of dominant position as a concept

  • For cautions to be issued under relevant clauses of part 1, article 10 of the Competition Law, even though they would not be if a case were initiated on the basis of the general prohibition on dominant position abuse, the FAS clarifies that a commercial entity’s actions may not be classed as breaching such general prohibition if they come under a specific clause of part 1, article 10 of the Competition Law.
  • Dominant position is established not only by determining market shares but also analysing the possibility of the commercial entity affecting the market conditions for commodity turnover. For instance, if the market share is from 35 to 50%, just a small difference between an entity’s share and that of its closest competitor, the biggest market-share holders changing places during the period under analysis and other factors are also taken into account. 
  • Abuse of dominant position may entail a turnover fine only if restriction of competition is proven or possible and the relevant analysis is made during consideration of an antitrust case. Otherwise, the consequences are presumed to consist in infringement of the interests of other entities or an unlimited number of consumers, this triggering a fixed fine.
  • To prove abuse of dominant position, the dominant position must be shown to restrict competition (if the entity were not in a dominant position, the method used for exercising its rights would be either impossible or economically unfeasible).
  • A distinction is drawn between abuse of a civil right and abuse of dominant position as an antitrust violation1.

How abuse of dominant position affects related markets

  • A dominant commercial entity can affect related markets on which it does not operate. Yet the mere existence of related markets does not mean that, for considering a specific case, any consequences or threat of consequences on them has to be assessed, unless a direct and immediate economic connection is established between an action on one market and its consequences on another.
  • The procedure for proving impact on related markets is formulated for the first time: (i) the antitrust body establishes dominant position on the specific market where the disputed actions are performed; (ii) an objective link is determined between these actions and the consequences on the related market. It is not permitted merely to state that there are potential consequences on a related market without providing any proof.
  • Impediments to entering a (related) goods market are considered separately.

Cautions

  • The FAS is required to analyse competition on the relevant market before issuing a Caution and, if requested, this analysis is provided to the entity receiving the Caution.
  • The entity may petition the FAS for the Caution performance period to be extended and even file a second such petition if there are relevant additional grounds. The right to extend the Caution performance period must not be abused.
  • If the entity fulfils the Caution instructions, the antitrust body may not initiate a case against it on the same grounds, even if, after the Caution instructions are fulfilled, it receives additional information about similar breaches by the entity predating such performance.
  • There are now formal and contextual requirements set for Cautions, which should specify the actions the entity can and must perform to stop breaching the antitrust legislation.

Should you have any questions concerning these Clarifications, we will be pleased to help.

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1Russian Supreme Court Ruling No. 301 КГ16 1511 on case No. А82-777/2015 of 04.07.2016 is cited: the court did not deem breach of the special rules governing provision of postal services to be a violation of the antitrust legislation because the actions were not orientated against competition.

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